Gov. Beshear files emergency regulation to stop gas tax hike

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Senate President Robert Stivers calls the governor’s move “illegal”

FRANKFORT, Ky.(WTVQ/PRESS RELEASE) – Gov. Andy Beshear’s administration filed an emergency regulation on June 2, 2022 to freeze the state gas tax and to prevent a $0.02 increase per gallon that would have taken effect July 1, 2022.

“Kentuckians cannot afford to pay more, and I am committed to doing everything I can to help keep more dollars in people’s pockets,” said Gov. Beshear. “This law was never intended to hurt Kentuckians during tough times, but with rising prices and inflation, this increase would have a negative impact on our families and it is time to take action.”

The state gas tax is set by statute, both in its rate and how it is calculated. The current rate of $0.26 was set to increase under a trigger, resulting in a price hike on both regular and diesel fuel. The Governor has looked for ways to relieve the financial burden on Kentuckians and asked the Department of Revenue to file this emergency regulation.

The funds collected through the state gas tax contribute to the Road Fund, which year to date is up 2.3%. Over the first seven months of the fiscal year, this action will reduce the budgeted Road Fund revenues by 1.6%. To make up for the lost road fund revenues, Gov. Beshear will propose using funds from the upcoming General Fund budget surplus. The budget for next year also includes a 21% increase in transportation infrastructure dollars from the federal government.

“This action to provide relief to Kentuckians will have no material impact on the transportation budget and projects,” Kentucky Transportation Cabinet Secretary Jim Gray said. “All projects will move forward.”

The Governor also sent a letter to Attorney General Daniel Cameron today asking for advice on whether he should declare a state of emergency in order to activate the price gouging statute and further protect Kentuckians.

In addition to the executive regulation filed today, the Governor signed an executive order in February that immediately stopped an increase in vehicle property taxes caused by soaring used car values and proposed a 1% state sales tax cut that the legislature failed to act on. He also wrote a letter to federal leadership, calling on them to suspend the federal gas tax until the end of the year.

Reaction to the governor’s move was swift from Republican leaders of the House and Senate.

Here is the statement from Senate President Robert Stivers:

“Because of the Biden Administration’s reckless policies, families across our commonwealth are struggling more and more. Each coming day brings a new crisis, from out-of-control inflation and record-high gas prices to a dangerously low baby formula supply.

While I support working with the governor to find a solution to address the exorbitant rise in fuel cost, I question the manner and process by which he is doing so.

KRS 138.226 requires the Department of Revenue to administer the gas tax as prescribed by law; the governor cannot deviate from the tax amount determined by statute. It is not within the governor’s purview to pick and choose which regulations he would like to enforce.

Not only is this action illegal, but it will only save residents 2-cents-per-gallon and with current prices in Kentucky reaching $5 per gallon, it will have little to no effect on what Kentuckians should expect to pay at the pump.

This legislature looks forward to working with the governor to accomplish the goal of suspending any additional increase to the gas tax but doing so in a legal and proper fashion.

The governor is making an attempt to try to mitigate the damage caused by the failed policies of his political ally, President Joe Biden.”

Speaker of the House David Osborne released the following statement:

“The House Majority Caucus is aware of the Governor’s announcement and is currently reviewing the executive order and the potential implications of today’s announcement. However, one thing stands out immediately – at two cents a gallon this provides little relief to Kentuckians paying almost twice as much at the pump as they did last year. While the skyrocketing cost is the obvious and inevitable result of disastrous foreign and domestic policies on the federal level, President Biden seems unwilling to provide meaningful solutions to the impact inflation is having on the cost of living for the average person and the Governor’s only response seems to be to ask him to print more money. This will continue to be a topic for us as we prepare for the 2023 Regular Session and, of course, as we monitor the influence that HB 8 and lowering the state income tax have on our economy. The first decrease is expected to leave an estimated $500 million in the pockets of working Kentuckians next year and provide the momentum to eliminate the income tax entirely.”

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